NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Investment Landscape
Which asset class has historically offered the highest potential for long-term inflation-beating returns, while also carrying the highest short-term price volatility, for a typical retail investor?
Equity shares offer the highest potential for long-term inflation-beating returns but also the greatest short-term volatility. Savings deposits, fixed deposits and treasury bills are more stable, yet their returns are lower and may struggle to outpace inflation over long periods.
- ABank savings deposits
- BEquity sharesCorrect
- CGovernment treasury bills
- DFixed maturity bank deposits
Explanation
Equities have generally delivered higher long-term returns than debt or deposits, but with larger short-term fluctuations. Deposits and treasury bills offer stability with lower returns that may barely beat inflation.
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